During 2020, Bart Inc. inaugurated new sales promotional program. For every 10 cereal box tops returned to Bart, customers will receive an attractive prize. Bart estimates that only 30% of the cereal box tops reaching the customers will be redeemed Units Amounts Sales of cereal box 2,000,000 2,4000,000 Purchase of prizes 36,000 180,000 Prizes distributed to customers 28,000 The accountant of Bart Inc. journalized the purchase of prizes as a debit to premium expense and credit to cash. He just prepared a memo entry for prizes distributed. Required: Prepare any necessary audit adjusting entries.

During 2020, Bart Inc. inaugurated new sales promotional program. For every 10 cereal box tops returned to Bart, customers will receive an attractive prize. Bart estimates that only 30% of the cereal box tops reaching the customers will be redeemed Units Amounts Sales of cereal box 2,000,000 2,4000,000 Purchase of prizes 36,000 180,000 Prizes distributed to customers 28,000 The accountant of Bart Inc. journalized the purchase of prizes as a debit to premium expense and credit to cash. He just prepared a memo entry for prizes distributed. Required: Prepare any necessary audit adjusting entries.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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ABC Company, a department store operates a customer loyalty program.The entity grants program members loyalty points when they spend a specified amount on their products. Program members can redeem the points for future purchases.The points have no expiry date. During 2020, the sales amounted to P 10,000,000 and the entity grants 5 points for every P 100 purchase. Management expects that only 70% of the points will be redeemed. Fair values of products sold and the reward points for the year were P 9,000,000 and P 1,000,000, respectively.As of December 31, 2020, half of the total points granted have already been redeemed. In 2021, the management revised its expectations to 90% of the points will be redeemed. As of December 31, 2021, there is a redemption of 25% of the remaining points.What amount should be reported as revenue earned from loyalty points in 2020?
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